Live Chat: Toronto’s Capital Budget

It's a multi-year, multi-billion dollar plan for building Toronto's municipal infrastructure, and it'll be unveiled at City Hall on Monday. Want to learn more? Here's some background on the capital budget.

Welcome to a live chat about Toronto’s capital budget—that’s the budget that covers infrastructure like roads, parks, and new transit. Toronto’s new capital budget will be unveiled on Monday, and we’re partnering with the Wellesley Institute to discuss this multi-billion dollar plan. If you’re wondering how the capital budget works; what is—and isn’t—included in it; and how it has evolved over the past decade, municipal budget expert Sheila Block will be live with us on Friday, from 11 a.m. to noon.
The live chat is now over, but here’s a transcript of the conversation Torontoist editor-in-chief Hamutal Dotan had with Sheila Block:

Hamutal: Welcome to our live chat about the capital budget—we’ll be starting in just a few minutes. Joining us will be Sheila Block, a municipal budget expert with the Wellesley Institute.

Sheila: Hi there, happy to be here

Hamutal: Sheila, let’s start with a very quick overview of the capital budget. Can you explain what it actually covers? What sorts of things does it pay for?

Sheila: The capital budget includes things that last longer. For example a streetcar is part of the capital budget but the salary of a TTC driver is operating budget.

Hamutal: You released a report about Toronto’s capital budget this week. (It’s embedded below.) What were your key questions going in?

Sheila: My key questions were about comparing Mayor Ford’s budgets to the Miller years. And, to understand Ford’s plans for the future. What were the differences in what they were spending capital dollars on? What were the differences in how they paid for those investments?

Hamutal: And what did you discover? How do Miller and Ford’s budgets compare?

Sheila: I found the results surprising. The pattern of spending was similar during the two periods. And, Mayor Ford actually spent less on transportation (which includes roads but not the TTC) than Mayor Miller. But Mayor Ford’s plan for the next ten years is much closer to what I had anticipated. A focus on transportation, and a narrower vision of what we should invest in.

Hamutal: But that is surprising – that three years into his administration, Ford has so far been spending less on roads and infrastructure maintenance than Miller. That was a key promise Ford made – to fill potholes, etc. Do you have any sense of why he hasn’t started to focus on that yet?

Sheila: Well, I think perhaps his attention was focused on the operating budget– as you will recall the core services review was focused on them.. And, perhaps his reluctance to take on debt also may also have contributed to it. But I remain surprised that this pattern of spending.

Hamutal: Over the next 10 years there’s a different story though—Ford wants to substantially increase the proportion of the capital budget that goes to things like roads and maintenance of existing infrastructure. That needs to be balanced by reductions elsewhere. So what does he want to spend less on?

Sheila: The share of spending on roads will increase while the share on TTC will fall in that plan. The share of spending on other City programs will fall, because spending on the Pan Am games will be completed. Similarly, improvements to a wide range of services will see a smaller share of spending; and the City will be focused on maintaining our existing, inadequate infrastructure.

Hamutal: Could you give some examples of specific services that will see less money? A lot of this stuff is abstract – possibly why the media doesn’t cover it very much – so that might be useful, to know concretely what sort of spending cuts we’re talking about.

Sheila: There are a couple of things to remember. Both Miller and Ford showed a decrease in spending over their 10 year plan. That is why I think it is best to compare the shares of spending. The largest decrease in the share of spending is on the TTC. There is an increase in the share on internal services; like facilities management and a big jump on transportation.

Hamutal: Rob Ford often touts his record of reducing Toronto’s reliance on debt, but you raise some concerns about this in your report. Can you explain where Ford actually get the money, if not from debt, and also why some people are worried about that?

Sheila: There are times when debt is a really good idea, like when you are buying a house, and when it is a bad idea, like using your credit card to buy groceries. There is a consensus among public finance experts that debt is a really good way to pay for municipal infrastructure. And, at a time when interest rates are at historic lows, it is also a really good deal because borrowing is very inexpensive.

Hamutal: What would an alternative look like? You write in your report that Ford has a “narrowed” approach to the capital budget. What are we missing out on? What things should we consider doing that we aren’t considering with Ford’s capital budgets?

Sheila: An alternative broader vision of what we need to invest in would include a wide range of services from the needs in our long term care homes to an increase in the number of recreation centres. It would also take a serious look at how to best move people around the city by increasing walkability, and making the best use of public transit dollars to increase access to jobs, good food and recreation for under-served neighbourhoods.

Hamutal: There’s a lot of anti-government, and in particular anti-tax rhetoric that has characterized public policy conversations in the last couple of years. How do you make the case that that isn’t just a nice set of things to have, but money that’s worth spending?

Sheila: I think the flooding last summer highlighted how much we need infrastructure investment. And, clearly no reduction or freeze in tax rates would have it make sense for us to buy our own sewer systems individually. We need to think about public expenditures like a bulk buying club. When we all pitch in, it makes these expenditures more efficient and more affordable. When we don’t invest people wind up bearing the costs of flooded basements on their own.

Hamutal: “Bulk buying club” – that’s a useful analogy.

Hamutal: You also write about the connections between the capital budget and people’s health. Can you say a bit more about how those things are related?

Sheila: The City’s capital investments have wide health impacts – from spending on recreation that increases physical activity and improves cardiovascular health; to investments in transit that have an impact on air quality and asthma rates. Investments in housing have a wide range of impacts from reducing TB and HIV to improving mental health. And, we can’t forget the impact of good sewage systems on public health including contaminants like e-coli.

Hamutal: It’s of course very hard to quantify opportunity cost. But is there a case to be made that this is an instance where we’d save money in the long run, by spending more on some of these major infrastructure upgrades now?

Sheila: Absolutely, but unfortunately, often the cost savings are over a longer period than the political cycle. And, I think sometimes we can get too focused on ideas of cost saving, and the City should invest because building a great city is worth the cost.

Hamutal: Yes – and that’s definitely something we’ll all be discussing more as the new budget comes out next week.

Hamutal: That’s all the time we have today – thanks so much, Sheila!

For more background on the capital budget, here’s a report prepared by the Wellesley Institute giving an overview of how it has changed in recent years: